January 09, 2018 –The International Air Transport Association IATA yesterday completed the first ticket purchase transaction using its IATA Pay platform in a live test environment.
IATA Pay is an industry-supported initiative to develop a new payment option for consumers when purchasing air tickets directly from airline websites. The option is a direct outcome of the European Commission’s second Payment Services Directive (PSD2), and the UK’s Open Banking regulation which encourage use of direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant.
Commenting on the development, Aleksander Popovich, IATA’s Senior Vice President of Financial and Distribution Services said that today’s “consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. IATA Pay responds to these expectations.”
This method which offers high levels of security to both user and recipient are faster, because they happen in real time.
IATA’s role has been to develop an industry solution enabling airlines to make this payment option available on their websites. The live test conducted with UK Fintech firm ipagoo was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines and Emirates.
IATA Pay provides airlines a faster and cheaper payment option compared to other alternatives which improves their cashflow management of the near instant credits while consumers will enjoy a simpler and secure payment method. IATA adds that the simplified payment process also results in fewer lost sales.
At the same time, airlines which are trying to manage significant card payment costs averaging $8 billion per year and rising say a large part of this cost is incurred in direct purchases from airline websites.
“One of IATA’s strategic objectives is to support airlines’ financial sustainability including controlling costs,” Popovich said.
IATA is also working with Deutsche Bank on a prototype for Europe (excluding the UK), starting with the German market, which is expected to undergo testing in the coming weeks.
African airlines see a passenger surge in November
Meanwhile African airlines saw a 5.7pc increase in November 2018 compared to the corresponding period for 2017. Although the figure was down from the 6.4pc registered in October, it was higher than the five year average, the International Air Transport Association’s (IATA) says in its latest analysis of demand and capacity in the passenger air transport sector for the various regions around the world during November 2018.
IATA says growth is occurring despite challenges in Nigeria and South Africa, the continent’s largest economies.
Africa’s share of the global airline market remained at 2.2pc.
Demand for cargo services continued its downward trend, decreasing by 7.8pc year in year in November 2018. This was the eighth month out of nine that demand for freight was contracting.
Carriers responded by reducing capacity by 7.4pc year on year. IATA says that demand conditions across all key markets to and from Africa remain weak.